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MUMBAI: Middle and lower level management staff at lenders such as ICICI Bank, HDFC Bank, and IndusInd Bank are probably in for sweet pay increases this year as human resource managers strategise to ward off poaching by new banks.

The advent of new banks for the first time in nine years is set to perk up demand for talent that can lure tricky customers, which is scarce in a market dominated by state-run banks with a desk-top culture. New banks could also be a blessing for many in lenders such as Royal Bank of Scotland that's shuttering some businesses and Indian diaspora in financial services in London and New York as Barclays and Citigroup axe jobs.

There will be a need for more than 7,000 skilled people in banking as Shriram City Union, Mahindra Finance and Religare Enterprises prepare to submit applications to convert themselves, or float a bank. This could trigger a direct hike in the cash component in private banks, or an increase in the form of higher stock options.

"Banks may try to address this issue by granting stock options to senior management that will be value accretive in the long term,'' said K Ramkumar, executive director, human resources, customer service & operations, ICICI Bank. "This would encourage staff to stick with institutions that have been in the system for some time.'' The Reserve Bank of India on Friday spelt out tough subjective norms for bank licences. Although more than a dozen business groups will apply, the regulator may just provide four to six licences.

Public Sector Banks on Hiring Binge

Even if some non-banking finance companies convert into banks, they would still require staff to canvas deposits and consumer lending.

Although the job creation by these new banks will be relatively insignificant, it will be some consolation for the Manmohan Singh government that is under flak for jobless growth for many years.

Between 2005-10, the job loss in the manufacturing sector was 5 million, said a study by the Planning Commission. The services sector, which saw 18 million new jobs during 2000-2005 , added just 4 million between 2005 and 2010.

"From a human resource standpoint, we don't have adequate resources," said Viren H Mehta, Partner, SR Batliboi & Co. "The greatest provider of expertise will be public sector banks. In the next three years, 5,000-7,000 new jobs can be created."

Apart from main banking jobs, it could create additional employment for about 3,000 in the technology sector as new banks have to be ahead in technology which alone can distinguish them from the established ones. This comes at a time when state-run banks are in for a record hiring binge for the first time in a decade that could add pressure on salaries.

The Institute of Banking Personnel Selection said 20 public sector banks, excluding State Bank of India, will hire 22,415 officers and 32,453 clerks for branch expansion and fill the gap created by retirement and attrition. SBI is independently hiring candidates to fill up 1,500 officer positions.

"Even if a corporate house has an operating non-banking finance company, it will have to get talent to run banking operations,'' says Mehta. "Garnering liabilities and credit creation which is key to banking is very different from building balance sheet."

But all existing banks may not face a tough time, and only those which do not have abundant supply of talent pool alone could struggle as the establishment of a bank takes a long time. "In the initial years. we could see these entities poaching a few talent from the senior management of banks," says ICICI Bank's Ramkumar. "Organisations with good leadership bench strength would not have to worry. It will take some time before these entities chalk out a business plan and decide on capital allocation and hire incrementally."